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Increased Demand, Restrictions and Less Pay: Is This the Future of Psychiatry?

Increased Demand, Restrictions and Less Pay: Is This the Future of Psychiatry?

January 01, 2003

Behavioral health care facilities are beginning to see an increase in private sector reimbursement, especially from the previously tight-fisted managed care industry, but public programs are continuing to reduce payments and squeeze providers. At the same time, lower government subsidies for medical training have produced a crop of new physicians who are staggering under debt loads as big as home mortgages. Meanwhile, public awareness of the benefits of behavioral health care has increased in the wake of the tragic events of Sept. 11, 2001.

These are among the views expressed by a panel of experts looking at the trends that are impacting the delivery of behavioral health care in the United States.

"A lot of managed care companies [that] had cut rates in the past are now actually providing increases because of the dearth of inpatient beds and the need to have providers for their members," Mark J. Covall, executive director of the National Association of Psychiatric Health Systems, told Psychiatric Times. "The inpatient business is starting to turn around. Our members are seeing increases in reimbursement, although the reductions in payments over the last decade were so substantial that it will take some time to get back to a reasonable and appropriate level."

Recovery will be slowed by the opposite trend on the part of government programs like Medicare and Medicaid, which now account for 58 cents of every behavioral health care dollar. Charles Ray, president of the National Council for Community Behavioral Healthcare, told PT, "The myth that the private sector pays an inordinate burden for health is just that--a myth. In 31 years in the field, I've never seen such a difficult environment."

"Medicare inpatient psychiatric services have traditionally been paid on a cost basis with certain caps," Covall said. "In the Balanced Budget Act of 1997, [the U.S.] Congress substantially reduced those payments, and we're still really under some tough payment restrictions in Medicare. Last year, Congress enacted legislation to move reimbursement to a prospective payment system, but we now expect the implementation of that to be delayed until the beginning of 2004. Depending on how it is finalized, it could build in a more predictable payment system for our members. Right now, it's a question mark. We're under a lot of pressure right now."

Covall added that budgets for state programs are being squeezed. "Many states have looked at cutting Medicaid expenditures because of rising costs. With the kinds of deficits that many states are experiencing, a lot of tough decisions are being made, which causes real concern on the provider side. Medicaid has always been a critical payment source for services to kids, as well as residential treatment centers and community-based programs."

Carl Eisdorfer, Ph.D., M.D., chair of the department of psychiatry at the University of Miami, told PT, "States are very actively getting involved in trying to manage care, including managed mental health care. There is a trend to limit the pharmacopoeia by staying with older, less expensive drugs. The pharmaceutical industry is trying to demonstrate that the new drugs ultimately reduce the overall cost of care, but the trend is to try to control the economics of care by negotiating rates down or limiting medications."